B.D.Singh, J. - (1.) These four writ applications were heard together on the request of the parties because common questions of law are involved in all of them, and this judgment will govern all of them. The various petitioners are dealers in raw jute and they have filed applications under Articles 226 and 227 of the Constitution of India challenging Section 3A read with Sections 5A and 42 and 46 of the Bihar Sales Tax Act, 1959 (Bihar Act 19 of 1959) (hereinafter referred to as 'the Bihar Act') and Rule 31B of the Bihar Sales Tax Rules, 1959 (hereinafter referred to as 'the Bihar Rules') which rule was introduced after filing of the application in C. W. J. C. 520. During the pendency of the hearing of the applications the State of Bihar have further amended the Bihar Rules by inserting Rule 8C published in Notification No. LSH-2058/67-3482-F. T. issued by the State of Bihar in the Bihar Gazette dated the 6th of April 1968. The petitioners have challenged the said Rule 8C also.
(2.) In order to appreciate the questions involved in these applications it will be necessary to summarise the facts mentioned in the application in C. W. J. C. 520. As indicated above, the petitioners are dealers in raw jute. In this application the business of Hansraj Bagrecha has been stated to be mainly of two categories, viz., (a) buying raw jute from the agriculturists or Farinas in West Bengal bringing it to Bihar at Kishanganj Railway Station and re-exporting it to West Bengal to the purchasers there who are either merchants or mill owners; and (b) buying goods from jute growers in Bihar and exporting it to the merchants or mill owners in West Bengal. Under the Bihar Act, which came into force with effect from 1-7-59, there was no provision for charging purchase tax from, the dealers in jute, but two new sections, namely, Sections 3A and 5A were introduced with effect from 1-4-67 by Sections 16 and 18 respectively of the Bihar Finance Act, 1966, and certain changes were also made in other sections like Sections 2 and 38 of the Bihar Act, Sections 3A and 5A run as follows :-- "3A. Goods liable to purchase tax --The State Government may from time to time, by notification declare any goods to be liable, to purchase tax on turnover of purchases : Provided that general sales tax and Special Sales Tax shall not be payable on the sale of goods or class of goods declared under this section." "5A. Point in the series of purchases at which purchase tax shall be levied.--The purchase tax on goods declared under Section 3A, shall be levied at the point of purchase made from a person other than a registered dealer." By Notification No. 10523 FT. dated 14-9-66, which came into force from 15-9-66, the Governor of Bihar declared "jute" as liable to purchase tax at the rate specified in the notification. A copy of the said notification is marked as An-nexure 'A' to the application. However, by an order referred in letter dated 24-11-66 issued by the Government of Bihar in the Finance Department, the schemes of levy of purchase tax on jute was stayed (vide Annexure B). Subsequently, the State of Bihar withdrew the stay order and decided to impose purchase tax on jute at the rate of 2 per cent to be realised from the first purchaser in the transaction. Accordingly the authorities of the Sales Tax Department sought to levy the purchase tax from 1-7-67. Thereafter the Superintendent of Commercial Taxes addressed letters to the Railway authorities, Kishanganj, prohibiting from loading of any goods or despatching them from any railway station within the Purnea district of Bihar, by making restriction on the ground that no despatches should be allowed to be made in fictitious or 'benami' names, and in order to recognise a genuine trader, registration certificate issued by the Superintendent of Commercial Taxes should be taken as a vital proof and jute should be booked only on production of such certificate. Accordingly by a letter dated the 10th of July, 1967, the Station Master, Kishanganj informed the Secretary, Jute Merchants Association, Kishanganj, to produce the certificate before loading was commenced and also stated therein that in case of failure wagon allotted will be cancelled and the registration fee shall also be forfeited and necessary demurrage will be charged. A copy of the letter is marked Annexure D. The petitioner also wanted to despatch jute and he requested the Railway authorities, Kishanganj to despatch the same, in specified form, which was refused by the letter with an endorsement which reads : "In this connection a registration certificate issued by the Superintendent, Commercial Taxes, Purnea is required for the movement of jute from the place." Hence, the petitioner has filed the aforesaid application, which was admitted on 1-9-67, wherein he has challenged the provisions contained in Sections 3A and 5A of the Bihar Act which have been quoted above, and has also challenged Rule 31B of the Bihar Rules which reads as follows :-- "31B. Conditions regarding despatch of certain class of goods -- (1) No person shall tender at any railway station, steamer station, airport, post office or any other place, whether of similar nature or otherwise, notified under Section 42, any consignment of such goods, exceeding such quantity, as may be specified in the notification, for transport to any place outside the State of Bihar, unless such person has obtained a despatch permit in Form XXVIIID from the appropriate authority referred to in the Explanation to Rule 31 and no person shall accept such tender unless the said permit is sur rendered to him. (2) An application for the said permit shall be made in Form XXVIIIC, in triplicate, to the appropriate authority. The said authority shall, on receipt of such application and on being satisfied about the particulars furnished in triplicates countersign all the three copies of the application and prepare a permit in form XXVIIID. One copy of the countersigned application and the permit shall be retained by the said authority and the other two copies shall be returned to the applicant. The consignment shall, thereafter, be tendered accompanied with one copy of such application and permit for transport, at any place referred to in Sub-rule (1)." He has also challenged the aforesaid Rule 8C which reads as follows :-- "8C. Determination of stage of levy of tax on purchases of declared goods. -- (1) The first purchase of goods declared under Section 14 of the Central Sales Tax Act, 1956, shall be leviable to tax in terms of sections 3, 3A and 5A of the Act and no subsequent sales or purchases in respect of the said goods shall be liable to any tax under the Act. (2) A dealer who claims deduction from his gross turnover on the ground that the goods purchased by him are exempt by virtue of Sub-rule (1) shall produce evidence to the satisfaction of the prescribed authority." On the main issue the question at the bottom is not one of refund of a wrong levy but of competence of the authorities concerned to demand or levy tax on inter-State sales or outside sales.
(3.) Mr. A. K. Sen, learned Counsel appearing on behalf of the petitioners in all the cases, has contended : (i) the levy of purchase tax on jute by Sections 3A and 5A of the Bihar Act contravenes Section 15 of the Central Sales Tax Act, 1956 (No. 74 of 1956) (hereinafter referred to as 'the Central Act') inasmuch as it involves a multi-point tax on a declared commodity. Hence, he submitted that Sections 3A and 5A of the Bihar Act are void and inoperative, (ii) The purchase tax, even if valid, cannot be levied on outside sale and on purchases made in Bihar in the course of inter-State trade. (iii) The assessment was done" in any event without giving opportunity to the petitioner to prove that the transactions were outside sale and inter-State sale and not liable to tax. (iv) In cases where there is no assessment the demand for tax from these persons and directing them for getting themselves registered as dealers was illegal and void, (v) Rules 31B and 8C of the Bihar Rules are ultra vires and void because (a) they are in excess of Section 42 of the Bihar Act, and (b) they constitute unreasonable restriction on the freedom, of trade and commerce inter-State.;